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HomeMy WebLinkAboutStaff Report 5.B 9/10/2012 ARei ucciItevw#5:3 Rp,LULt 185$ DATE: September 10. 2012 TO: Honorable Mayor and Members of the City Council through the City anager FROM: Pamala Stephens, Human Resources Manager 1 / SUBJECT: Ratification of the Memorandums of Understanding executed by the City and the Petaluma Professional and Mid-Managers Association for Employees of Unit 4 (Professional), Unit 9 (Mid-Managers) and Unit 11 (Confidential). RECOMMENDATION It is recommended that the City Council adopt the Resolution ratifying the Memorandums of Understanding (MOU) executed by the duly authorized representatives of the City and the Petaluma Professional and Mid-Managers Association, Unit 4 (Professional), Unit 9 (Mid-Managers), and Unit 11 (Confidential). BACKGROUND • The Petaluma Professional and Mid-Managers Association, Unit 4 (Professional), Unit 9 (Mid- Managers), and Unit 11 (Confidential) MOUs expired on June 30, 2010. The City met and conferred with Association representatives and has reached agreement with the Association over the terms and conditions of employment for the contract period of July 1, 2010 through June 30, 2014. DISCUSSION The main changes to the MOUs negotiated by representatives of the City and Units 4, 9 and 11 are the second-tier retirement formula for newly hired employees and the cap that is placed on health cost increases in 2013 and 2014. Second-tier employees will receive a retirement benefit that provides a 2% at 60 formula retirement plan and a three-year final average compensation, instead of the current benefit of 2% at 55 formula retirement plan and one-year final average compensation. Effective upon agreement with bargaining Units 1, 2 and 3, the City will proceed to amend its contract with CaIPERS. The reduced retirement benefit becomes effective upon an amendment to the Ca1PERS contract. City of Petaluma miscellaneous employees will continue to make a 7% contribution. Agenda Review: City Attorney � Finance Director City Manager I The MOUs include an increase in the City's health plan contribution for FY 2010/2011 and 2011/2012 that was budgeted and paid. The MOUs provide that the City will contribute a monthly benefit that includes an increase of 9% effective January 1, 2013, and that employees pay any portion of an increase exceeding 9%. The City's contribution for FY 2012/2013 has been budgeted. The Kaiser Plan rate for 2014 is unknown and the MOUs provide for a monthly benefit that depends upon the actual percentage increase in the Kaiser-Bay-Area/Sacramento premium. The MOUs indicate that the City's contribution for 2014 shall be up to a 9% increase or the actual 2014 CaIPERS Health Premium for Kaiser-Bay-Area/Sacramento for current employees and their covered family members, whichever is less. Any increase in excess of 9% will be the responsibility of the employee. MOU language for Units 4 and 11 includes a change that will allow employees to retain up to two-hundred-forty (240) hours of unused Compensatory Time at any given point during the fiscal year instead of a forty (40) hour limit. This gives an employee more flexibility on the use of compensatory time and provides the City the opportunity to allow time-off in lieu of paying overtime. This change does not have a known financial impact. MOU language for Units 9 and 11 includes a new provision that permits employees to carry forward up to forty (40) hours of unused administrative leave into the next fiscal year. This gives an employee more flexibility on the use of administrative leave and has no financial impact. The MOUs also reflect an agreement to remove a provision discussing ethical standards outlined in the Discipline and Appeals Procedure section. Ethical standards have been communicated effectively by other means including training and performance standards. FINANCIAL IMPACTS There are no changes to salary. There will be no immediate savings to the City when the second-tier is implemented. Ultimately, it is expected that City costs will decrease as the mix of first-tier employees decreases and new second-tier employees increase. When the mix of all first and second tier employees reaches a 50-50% ratio, employer costs are estimated by Ca1PERS to decrease by 1.7%. In current dollars a decrease of 1.7% would reduce the City's annual employer contribution for miscellaneous employees by $203,330. Health premiums for the Kaiser Plan increased by 4.56% effective January 1, 2010, 6.8% effective January 1, 2011 and 7.3% effective January 1, 2012. The City continued to provide Unit 4, 9 and 11 employees with a monthly benefit that included those increases. The costs for the increase in the City's contribution for FY 2010/2011 and 2011/2012 were budgeted and paid. The Kaiser Plan will increase by 9.53% effective January 1, 2013. The MOU provides that the City contribute to any increase in the monthly benefit up to 9% effective January 1, 2013, thus the employee share for health benefits will increase by .53%. The City's contribution for all employee health premiums and the medical cash-in-lieu program for FY 2012/2013 has been budgeted and is estimated to cost $4,207,708. The Kaiser Plan rate for 2014 is unknown and it is recommended that the City provide employees with a monthly benefit that depends upon the actual percentage increase in the Kaiser-Bay-Area/Sacramento premium. The MOUs provide that the City's additional benefit contribution for 2014 shall be up to a 9% increase of the 2013 Health Plan Rate contribution amount, less the City's PEMHCA contribution, times 95% or an amount equal to the actual 20. 14 Ca1PERS Health Premium for Kaiser-Bay-Area/Sacramento, less the City's PEMHCA contribution, times ninety-five percent (95%) for current employees and their covered family members, whichever is less. Similar to 2013 and as indicated previously, any portion of an increase in excess of 9% will become the responsibility of the covered employee. The employee pays the difference between the cost of his or her health plan premium and the City's PEMHCA contribution and additional benefit amount. Additional Benefit-Effective January I,2010- Increase of 4.56%in Kaiser Rate City Maximum.Additional Total Benefit Coverage 2010 Kaiser Rate PEMHCA Benefit Contributed by the Contributed by the City Contribution City Single $532.56 $105.00 $406.18 $511.18 2-Party $1,065.12 $105.00 $912.11 $1,017.11 Family $1,384.66 $105.00 $1,215.68 $1,320.68 Additional Benefit-Effective January I,2011 -Increase of 6.8%in Kaiser Rate City PEMHCA Maximum Additional Total Benefit Coverage 2011 Kaiser Rate Contribution Benefit Contributed by the Contributed by the City City Single $568.99 $108.00 $437.94 $545.94 2-Party $1,137.98 $108.00 $978.48 $1,086.48 Family $1,479.37 $108.00 $1,302.80 $1,410.80 Additional Benefit-Effective January I,2012-Increase of 7.3%in Kaiser Rate City Maximum Additional Total Benefit Coverage 2012 PEMHCA Benefit Contributed Contributed by the Kaiser Rate Contribution by the City City Single $610.44 $112.00 $473.52 $585.52 2-Party $1.220.88 $112.00 $1,053.44 $1,165.44 Family $1,587.14 $112.00 $1,401.38 $1,513.38 Additional Benefit-Effective January I,2013 -Actual increase in the Kaiser rate was 9.53%. City to pick up 9.0%of the rate increase 2013 Health Total Benefit Plan Rate 9% City Maximum Additional Coverage PEMHCA Benefit Contributed Contributed by the Increase of 2012 City Kaiser Rate Contribution by the City Single $665.38 $115.00 $522.86 $637.86 2-Party $1,330.76 $115.00 $1,154.97 $1,269.97 Family $1,729.98 $115.00 $1,534.23 $1,649.23 3 Additional Benefit—Effective January I,2014 Up to 9% Increase of 2013 Maximum Health Plan Rate City's Additional Benefit Coverage or actual 2014 PEMHCA Contributed Kaiser Rate, Contribution by the City whichever is less 0 9%Increase of 2013 Health Plan Rate specified in section Up to$725.26 or 21.6, less the City's PEMHCA contribution,times 95%or Single actual whichever Unknown the actual 2014 CaIPERS Health Premium for Kaiser- is less Bay-Area/Sacramento, less the City's PEMHCA contribution,times 95%,whichever is less. Up to$1,450.53 or actual 2-Party Unknown whichever is less Up to$1,885.68 Family Or actual Unknown whichever is less The Unit 4, 9 and 11 MOUs are on a fiscal year basis from July 1 to June 30. CaIPERS health plan rate increases are on a calendar year basis. The City provides a cash-in-lieu program for employees who do not enroll in the health plan. That program provides eligible employees with a benefit amount of half or fifty percent of the benefit that the City would otherwise contribute towards the health plan. The total cost of health benefits for Unit 4, 9 and 11 employees on a fiscal year basis, including the cash-in-lieu program is estimated to be as follows: Fiscal Year Unit 4 Unit 9 Unit 11 Total 2009-2010 $111,750 $335,214 $44,569 $491,533 2010-2011 $127,591 $368,363 $50,299 $546,253 2011-2012 $128,524 $393,833 $38,243 $560,600 2012-2013 $149,692 $398,660 $33,588 $581,940 2013-2014 $163,125 $434,438 $36,602 $634,165 ATTACHMENTS 1. Resolution Ratifying Memorandums of Understanding Executed by the Duly Authorized Representatives of the City and the Petaluma Professional and Mid-Managers Association Unit 4 (Professional), Unit 9 (Mid-Managers), and Unit 11 (Confidential). if Attachments—continued 2. Summary of Changes to the Memorandums of Understanding for employees in Unit 4 (Professional), Unit 9 (Mid-Managers) and Unit 11 (Confidential) for the Fiscal Years 2010 —2014. ® Items listed below are large in volume and are not attached to this report, but may be viewed in the City Clerk's office. Unit 4, 9 and I1 MOUs2010-2014 5 RESOLUTION RATIFYING MEMORANDUMS OF UNDERSTANDING EXECUTED BY THE DULY AUTHORIZED REPRESENTATIVES OF THE CITY AND THE PETALUMA PROFESSIONAL AND MID-MANAGERS ASSOCIATION FOR EMPLOYEES OF UNIT 4 (PROFESSIONAL), UNIT 9 (MID-MANAGERS), AND UNIT 11 (CONFIDENTIAL) WHEREAS, the City, through its duly authorized representatives, and the Petaluma Professional and Mid-Managers Association, through its duly authorized representatives, have concluded their mutual obligation to meet and confer in good faith with respect to terms and conditions of employment for the employees of Units 4, 9, and 11 in accordance with the Meyers-Milias-Brown Act and the City's Employer-Employee Relations, Rules, and Regulations (Resolution No. 5512 N.C.S.); and WHEREAS, the duly authorized representatives of the City and the Petaluma Professional and Mid-Managers Association, have executed Memorandums of Understanding pursuant to Section 15, Resolution No. 5512 N.C.S. and recommend their approval by the City Council; and WHEREAS, the City Manager, pursuant to Section 28 of the Charter of the City of Petaluma, and as the City's Municipal Employees' Relations Officer (Resolution No. 5375 N.C.S.), is required and empowered to make a recommendation to the City Council on matters related to employees' compensation; and WHEREAS, the City Manager has reviewed and concurs with said Memorandums of Understanding for Units 4, 9, and 11 and does recommend that the City Council ratify said Memorandums of Understanding; and NOW, THEREFORE, BE IT RESOLVED that the Memorandums of Understanding, being in the best interests of the City, is ratified and the terms and conditions of said Memorandums of Understanding (as attached) shall be effective July 1, 2010, through June 30, 2014. ATTACHMENT 2 Summary of Changes to the 2010—2014 Memorandums of Understanding for Unit 4 (Professional), Unit 9 (Mid-Managers), and Unit 11 (Confidential) A complete copy of the 2010 —2014 Memorandums of Understanding for Unit 4, 9 and 11 are on file in the City Clerk's office. I. Benefits 1. Second-tier Retirement in CaIPERS New MOU language that provides for a different level of benefits (two-tiered retirement) for newly hired Miscellaneous employees. Effective upon agreement with the City's other Miscellaneous bargaining units, the City shall amend its contract with Ca1PERS. The amended contract shall provide that Miscellaneous employees hired after the effective date of the amendment shall receive the 2% at 60 formula retirement plan and the three-year final average compensation; instead of the current benefit of 2% at 55 formula retirement plan and one-year final average compensation. 2. Health Benefits —Active Employees and Retired Employees Revised language that reflects the City's increased contribution amount towards health insurance and the increased PEMHCA rates for 2010, 2011,2012,2013 and 2014. II. Other Changes to the.MOU I. Compensatory Time— For Units 4 and 11 only Changed language that allows an employee to retain up to two-hundred-forty (240) hours of unused Compensatory Time at any given point during the fiscal year. 2. Administrative Leave— For Units 9 and 11 only New language that enables employees to carry forward up•to forty (40) hours of unused administrative leave into the next fiscal year. 3. Disciplinary and Appeals Procedures The removal of a provision outlining ethical standards. III. Revised new language to reflect either change in policy, practice, and law or updated language. I. Term of MOUs — July 1-2010 through June 30, 2014. 2. CaIPERS - Updated reference to CaIPERS sections to reflect CaIPERS changes. 3. Layoff—Corrected section numbers.